Retail discount (3)

Navin Shah: In MQ2018/3219you said, “due to state aid limits major high street, pub and restaurant chains which were very badly hit by the 2017 revaluation in London will not benefit at all”. Can you provide more details on how state aid limits affect abusiness’ability to claim the retail discount?

The Mayor: Providing discretionary relief, such as the retail discount, to ratepayers is likely to amount to State Aid - the means by which the European Union regulates state funded support to businesses. State Aid rules limit aid from government to a maximum of €200,000 over a rolling three-year period – equivalent to around £55,000 per annum.
Taking into account reliefs provided across England, most large high street, pub and restaurant chains might easily reach or exceed this limit on just one or two properties out of their portfolio and therefore are ineligible for further reliefs above this threshold. When announcing the retail relief in the 2018 Budget the Chancellor made clear that the two year retail relief scheme for 2019-20 and 20-21 would only apply to an estimated 90 per centof independent retailers and related businesses (e.g. cafes and pubs) – highlighting the fact that chains would generally not benefit. In practice due to the £51,000 rateable value threshold the proportion of independent retailers benefitting from the scheme in inner and central London is likely to be much lower.
The outgoing Government confirmed that State Aid rules are expected to continue to apply as now during any Implementation Period if the UK leaves the EU on the basis of the current negotiated deal. The position post transition would be a matter for the Government to determine having regard to any future trading arrangements agreed with the EU.

Retail discount (2)

Navin Shah: The Federation of SmallBusinessesrecommends that the Retail Discount be increased to at least 50%, made permanent and extended to small firms operating in other sectors, including manufacturing. Would you support such a change to thebusinessrates?

The Mayor: I agree that in order to simplify and widen its scope there is a case for extending the retail relief scheme to other sectors and also applying a higher qualifying rateable value threshold in London than the current £51,000 national figure. This could operate in parallel to or in place of the current small business rate relief scheme which does apply to all sectors including manufacturing. The Government’s eligibility criteria for the current retail discount scheme are in any case rather arbitrary and thus subject to different local interpretation – for example pubs are eligible for the scheme but live music venues are not and car repair garages are generally ineligible but shops selling car parts are.
More generally we need a system that is more responsive to the needs of local businesses and not a national “one-size fits all” approach. The London Finance Commission, which I reconvened in 2016, called in its final report for London’s government to be granted full control of business rates reliefs, including the flexibility to introduce a more effective relief scheme for small businesses which reflects the capital’s higher rental values.
I believe that local authorities are best placed to design the right relief schemes to support local businesses in their areas.

Retail discount (1)

Navin Shah: You could qualify for retail discount on yourbusinessrates if yourbusinessis a shop, restaurant, café, bar or pub is in England and has a rateable value of less than £51,000. How manybusinessescurrently benefit from this relief? Please break down by borough.

The Mayor: The business rates retail discount scheme was announced by the Government in the Chancellor’s Budget in November 2018, for introduction from the financial year beginning in April 2019. As it is a new relief, the Government has not yet published figures for the number of hereditaments in each local authority receiving this relief. However, in January 2019, ahead of the implementation, the 33 billing authorities in Greater London made an estimate that a total of £143.4 million in relief would be granted in 2019-20. This estimate ranged from just under £13 million in the City of Westminster to around £1.4 million in Haringey and Barking and Dagenham.

Hardship relief

Navin Shah: In England, councils can reduce yourbusinessrates bill with hardship relief, if you would be in financial difficulties without it and giving hardship relief to you is in the interests of local people. How manybusinessescurrently benefit from this relief? Please break down by borough.

The Mayor: It is not possible to identify the number of businesses benefitting from hardship relief by local authority. However, in 2017-18, the most recent year for which figures are available, the total cost of hardship relief granted across England was £2 million.
Local authorities also offer several discretionary relief schemes, which are funded by central government through grants (known as section 31 reliefs). The two main reliefs which could be granted to businesses facing financial difficulties in 2019-20 or which faced large rises in bills following the 2017 revaluation are:

Charitable rate relief

Navin Shah: Charities and community amateur sports clubs can apply for charitable rate relief on theirbusinessrates of up to 80% if a property is used for charitable purposes. How manybusinessescurrently benefit from this relief? Please break down by borough.

The Mayor: The Ministry for Housing, Communities and Local Government (MHCLG) publishes statistics on the number of non-domestic properties (hereditaments) in receipt of mandatory charitable relief and community amateur sports clubs (CASCs) in each local authority. The most recent statistics are as at 31 December 2018 and therefore represent a ‘snapshot’ at that date. The number of hereditaments is not necessarily the same as the number of businesses that benefit from the relief, as, business rates payers may be entitled to reliefs for more than one property. The table below shows the number of hereditaments benefiting from charitable and CASC relief in each billing authority in Greater London, as at 31 December 2018. In total 14,741 hereditaments received mandatory charitable relief and 187 hereditaments received mandatory CASC relief.
Table showing hereditaments in receipt of mandatory charitable relief and mandatory community and amateur sport club (CASC) relief
Billing Authority
Mandatory Charitable Relief
Mandatory CASC Relief
Barking and Dagenham
164
2
Barnet
458
13
Bexley
269
13
Brent
352
6
Bromley
393
29
Camden
911
-
City of London
246
-
Croydon
482
31
Ealing
331
9
Enfield
311
20
Greenwich
356
12
Hackney
596
-
Hammersmith and Fulham
294
-
Haringey
335
9
Harrow
220
11
Havering
235
18
Hillingdon
294
13
Hounslow
265
10
Islington
696
1
Kensington and Chelsea
335
-
Kingston upon Thames
202
11
Lambeth
639
2
Lewisham
386
-
Merton
227
7
Newham
436
-
Redbridge
285
19
Richmond upon Thames
307
13
Southwark
751
6
Sutton
207
5
Tower Hamlets
632
-
Waltham Forest
250
10
Wandsworth
335
8
Westminster
1,167
1
Total - Greater London
13,367
279
Figures as at 31 December 2018
Source: MHCLG: National non-domestic rates 2019 to 2020: supplementary data tables: https://www.gov.uk/government/statistics/national-non-domestic-rates-collected-by-councils-in-england-forecast-for-2019-to-2020

Small business rate relief (2)

Navin Shah: The Federation of SmallBusinessesrecommends that the threshold for SmallBusinessRates Relief be increased from £12,000 to at least £30,000, given that the threshold has remained largely static in recent years, despite the Rateable Values that determine rates bills surging in many parts of the country, particularly on high streets in large towns and cities. Would you support such a change to thebusinessrates?

The Mayor: I welcome the lobbying which the FSB is doing in this area and have previously called on the Government to increase the rateable value threshold where small business receive 100 per centrelief on their bills in England to at least the same level as in Scotland of £15,000 (from the current £12,000 level). The threshold for partial relief (i.e. scaling back from 100 per centto no relief) would therefore also be increased by £3,000 in England to at least £18,000.
It also does not make sense – as at present - that these rateable value thresholds for SBRR should be at the same level across the whole of England, when rateable values are much higher in London and other high cost areas.
In addition small businesses in Scotland retain eligibility for their equivalent SBRR scheme indefinitely if the combined rateable value of their properties is up to £35,000 compared to only £27,000 in London and £20,000 in the rest of England. There is also a case for levelling up these thresholds so they match the position north of the border.
As the FSB has highlighted there may a case for higher threshold in central and inner London boroughs where rents are much higher than the national average and I would encourage the Government to undertake further analysis to assess the practicality of this.
I have already led the way by increasing the rateable value threshold at which ratepayers pay the GLA’s Crossrail business rate supplement from £55,000 when I took office to £70,000. This has reduced the numbers of business premises in London liable to the BRS by more than 20 per centthan would otherwise have been the case.